AP EXPLAINS: What is bitcoin? A look at the digital currency
NEW YORK (AP) — Australian police raided a home and office Wednesday that, according to technology websites, belongs to the founder of the virtual currency, bitcoin.
Bitcoin is an online currency that allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties.
Transactions can be made anonymously, making the currency popular among people who want to conceal their financial activity.
Businesses ranging from blogging platform Wordpress to retailer Overstock have jumped on the bitcoin bandwagon amid a flurry of media coverage, but it's still not as prevalent as cash.
A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction.
Much of the mischief surrounding bitcoin occurs at the places where people store their digital cash or exchange it for traditional currencies, like dollars or euros.
If an exchange has sloppy security, or if a person's electronic wallet is compromised, then the money can easily be stolen.